There's been a big increase in the amount of cars being sold illegally with outstanding finance, according to the Finance and Leasing Association (FLA).

Conversion fraud – selling a vehicle that’s still owned by a finance company, rather than the registered keeper – rose by 10% in 2011.

The crime accounts for almost 40% of all car finance frauds. In 2011, 815 cases of motor finance fraud were recorded, with a total value of £13.6 million.

Paul Harrison, of the FLA, said: ‘While it may be tempting to sell your car if you are in financial difficulties, if you don’t speak to your finance company first, you may be classified as a fraudster.

‘It’s important that the owner of the car – the finance company – knows who is driving it at all times, as required under the terms and conditions of a credit agreement.’

The figures underline the importance of carrying out a history check on used cars before you buy.